The city is sitting on tens of millions of dollars paid by San Diego electricity customers to bury transmission lines underground, even though project officials say the improvements will take 50-plus years to complete, a new report concludes.

City Auditor Eduardo Luna recommends in his latest report that officials dip into the program’s $40 million reserves — about one year’s spending — to speed up the work of burying power lines.

Yes
95% (657)

No
5% (33)

690 total votes.

“If the (city) reduced its cash balance to cover six months of expenses, an additional $20 million would be made available for undergrounding program expenses such as trenching, streetlight replacement and street repairing,” the audit states.

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If project officials lowered the reserves to three months’ spending, they would have an additional $30 million to invest, the auditors noted.

According to the audit, the Government Finance Officers Association recommends public agencies begin with 90 days’ worth of working capital in reserve and adjust the savings as work proceeds.

The city audit makes four specific recommendations, all of which were agreed to by program officials.

Specifically, the city said it would start reconciling reports that San Diego Gas & Electric Co. provides to city and state regulators. Officials also agreed to create a reserve policy, spend revenue that exceeds that limit and establish a plan to improve tracking of labor costs associated with the projects.

“This will result in increased spending and therefore the cash balance will gradually be reduced to the appropriate target level,” wrote Garth K. Sturdevan, director of the city Transportation and Storm Water Department.

SDG&E began burying transmission lines across San Diego in 1970, after state regulators required the work, the audit said. Even then the effort was expected to take decades to implement.

The utility sets aside 1.15 percent of its gross receipts to comply with the state order, a total of approximately $13 million a year that is spent directly by SDG&E.

In 2003, San Diego city officials approved a more aggressive policy for the work and approved a deal that imposes an additional 3.53 percent surcharge on SDG&E ratepayers to pay for the program.

The city’s Utilities Undergrounding Program seeks to convert every residential overhead utility line in San Diego to underground transmission over the next 53 years.

The 2003 agreement, which expires in 2021, generates about $48 million a year to pay for burying transmission lines. The funds are banked by City Hall and paid to the utility as work is performed.

Program managers have completed an average of 15 miles per year over the past 10 years. The fund is projected to hold more than $46 million in reserve in fiscal year 2014, the audit said.